In the September 27, 2002 Issue:

Copyright State Science & Technology Institute 2003. Information in this issue of the SSTI Weekly Digest was prepared under a cooperative agreement with the U.S. Department of Commerce, Economic Development Administration. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected. Any opinions expressed in the Digest do not necessarily reflect the official position of the U.S. Department of Commerce.

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Bush Administration Opposes Doubling NSF, Broadening EPSCoR
The Association of American Universities has posted the text of a September 17 letter written by Rita Colwell, Director of the National Science Foundation (NSF), that outlines the Bush Administration's opposition to S. 2817, a bill to double the size of the NSF budget over a five-year period. A similar effort has been introduced in the House by Science Committee Chairman Sherwood Boehlert (R-NY) and co-sponsored by members of both parties (see May 10, 2002 SSTI Weekly Digest).

The Colwell letter was sent to Senator Ron Wyden (D-OR), chair of the Subcommittee on Science, Technology, and Space, Senate Committee on Commerce, Science, and Transportation. In it, Director Colwell states:

"[T]he amounts authorized in S. 2817 do not conform to the Administration's FY 2003 Budget request for NSF. NSF supports the Administration's budget request and therefore the bill should be amended to reflect the amounts contained in the authorizing legislation the Foundation transmitted to the Congress on May 14, 2002. Moreover, Dr. John Marburger, Director of the White House Office of Science and Technology Policy (OSTP) and the President's Science Advisor, has stated that any plans for increased expenditures must be supported by a specific rationale for each increase, rather than an arbitrary formula."

The Administration has supported Congress's efforts to double the budget for the National Institutes of Health (NIH), a process which should be completed with the FY 2003 appropriations.

In addition to several other complaints with the bill, the letter also singles out concern with language in S. 2817 that would expand the number of states eligible to receive funding through the Experimental Program to Stimulate Competitive Research (EPSCoR). The EPSCoR program promotes the development of eligible states' science and technology resources through partnerships involving a state's universities, industry and government, and the federal R&D enterprise. EPSCoR's goal is to maximize the potential inherent in a state's S&T resources and use those resources as a foundation for economic growth. Matched by state funds, EPSCoR activities provide the core of several states' efforts to develop tech-based economies.

Colwell writes, "EPSCoR, as you know, is a state-NSF partnership to stimulate sustainable improvements in R&D competitiveness through the development and utilization of science and technology resources in a state's major research universities. The current eligibility rate of .7% will allow those states most in need to participate in this program. Increasing this eligibility rate to 1%, which would increase the number of participating states, could have the effect of diluting available funds to the states most in need, thus jeopardizing the program's purpose - to help the neediest states develop their research base and improve science and engineering research and education programs at their colleges and universities."

The text of the letter is available at: http://www.aau.edu/research/NSFLtr9.17.02.html

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Virginia Governor's Tech Plan Defines CIT Roles
The future of Virginia's Center for Innovative Technology (CIT) became clearer on Wednesday with Governor Mark Warner's release of Commonwealth of Virginia Strategic Plan for Technology for 2002-2006. CIT has a lead position for half of the eight initiatives outlined in the 129-page document.

Highlights of "One Virginia," CIT's portion of the plan, call for:

Appendix 4 lays out a revised operating FY 2003 plan for CIT that identifies specific quantifiable goals for the state's lead TBED program with its $9.2 million budget — a decrease of 26 percent from FY 2002. Among the targets is leveraging $346.8 million in TBED for Virginia. Of that total, $250 million would stem from increased sales, savings and private capital, and $71.8 million would come in the form of federal research funds. The remaining $25 million is estimated to come from IP and commercialization activity, including the addition of 330 technology start-up companies in FY 2003.

The full strategic plan and a separate executive summary are available at: http://www.governor.state.va.us/

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TA Outlines Critical Issues for Broadband
Following President Bush's call for the nation to "be aggressive about the deployment of broadband," the Technology Administration within the U.S. Department of Commerce recently issued Understanding Broadband Demand — a 25-page paper examining the state of broadband demand and usage in the U.S. and identifying successes, challenges and actions to promote more aggressive uptake.

After several expert roundtables, TA concluded that, while significant supply side issues such as regulatory considerations remain, "(T)he factor most likely to accelerate broadband demand is the creation and deployment of easily understood, value-adding business and consumer applications at prices that meet the needs of the market."

TA points to December 2001 research that reveals the U.S. ranked sixth internationally in the percentage of total households with broadband usage at 10.4 percent. South Korea led the world with 51.7 percent, followed by Hong Kong (26.0 percent), Canada (19.7 percent), Taiwan (18.2 percent) and Sweden (13.4 percent).

Broadband usage and demand is heavily skewed toward higher incomes. Market research has found that 72 percent of dial-up consumers will not upgrade to broadband because of its high cost, which also rose 11-16 percent last year. In addition, a separate study found 75 percent of dial-up users are content with the quality of their current service.

Understanding Broadband Demand concludes with a discussion of several steps that can be taken to accelerate broadband demand. Twenty-seven recommendations are organized by actor: the federal government, state and local governments, business leaders, and innovators and entrepreneurs.

On the state and local level, TA recommends:

Links to successful examples of state and local initiatives are provided for many of the recommendations.

Understanding Broadband Demand is available at: http://www.ta.doc.gov/Reports.htm

To learn more about Broadband...
Successful state and local efforts to encourage broadband deployment and usage will be discussed at Bringing Broadband to All, one of more than 30 sessions next week at SSTI's 6th Annual Conference, Building Tech-based Economic Development: From Policy to Practice. Bob Filka, Vice President of the Michigan Broadband Authority Board, and Jane Patterson, Executive Director of North Carolina's Rural Internet Access Authority, will share insights on their programs on Thursday at 2:00. Doug Devereaux, Technology Policy Analyst with the TA Office of Technology Policy, will moderate the session.

More information about SSTI's conference is available at: http://www.ssti.org/conference02.htm [expired]

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California Promotes Stem Cell Research With New Law
Joined by actor Christopher Reeve and several of California's leading biotech researchers, Governor Gray Davis Sunday signed legislation designed to promote stem cell research in California.

"Stem cell research is responsible research that could potentially save millions of lives," said Gov. Davis. "With world-class universities, top-flight researchers and a thriving biomedical industry, California is perfectly positioned to be a world leader in this area. I am determined to keep California at the forefront of medical research and scientific innovation."

Stem cells are cells that have the ability to divide for indefinite periods in culture and to give rise to specialized cells (such as brain tissue, blood, skin, or any organ). These cells can be found in a variety of sources including human embryos, adults, umbilical cords, and placentas. Stem cells can be used to generate cells and tissue that can be used for cell therapies. Researchers say this may lead to the cure or effective treatment of diseases, conditions, and disabilities affecting more than 128 million Americans (including cancer, Parkinson's and Alzheimer's diseases, spinal chord injury, stroke, burns, heart disease, diabetes, and arthritis).

SB 253, by Senator Deborah V. Ortiz (D-Sacramento), authorizes stem cell research from any source, including human embryonic stem cells, that is reviewed by an approved institutional review board. The new law also will facilitate the voluntary donation of embryos for stem cell research. The sale of embryos is prohibited.

The federal government has significantly limited federal funding available for stem cell research, specifically for human embryonic stem cell research.

Last week, the University of California, San Francisco began distributing the first of its two human embryonic stem cell lines to academic researchers, increasing the opportunity for scientists around the world to study the therapeutic potential of the cells. UCSF is one of only two academic institutions in the U.S. that produced human embryonic cells lines that qualified for inclusion in the National Institutes of Health Human Embryonic Stem Cell Registry established by President Bush in August 2001. The cell lines included on the registry can be studied by academic researchers with federal funds.

More information on the California legislation is available at: http://www.governor.ca.gov/state/govsite/gov_homepage.jsp

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Illinois Quadruples Number of Technology Enterprise Corporations
On Thursday, Illinois Governor George Ryan announced nearly $3 million in state grants for eight Illinois Technology Enterprise Corporation (ITEC) centers, quadrupling the number of ITECs. Funded by the Illinois Department of Commerce and Community Affairs (DCCA), the centers assist technology-based start-up businesses and serve as incubators for the new ventures.

The grants announced for the centers will continue to fund operations at Northwestern University in Evanston and the University of Illinois in Champaign and support six new centers in Chicago, Naperville, Lemont, Peoria, Carbondale and Springfield.

Based at or partnering with universities, each ITEC is expected to stimulate development of advanced technology enterprises by transforming innovation into enterprises. To meet their missions and goals, each center will measure results in terms of stimulating the formation of technology-based businesses, nurturing and incubating these new ventures, and creating new jobs in the advanced technology segments of the economy technology occupations.

Open since May 2000, the state's first ITEC Center at Northwestern University already has provided services to more than 150 entrepreneurs and early-stage companies.

More information on the ITEC program, including a list of the new ITEC grantees, is available at: http://www.illinoisbiz.biz

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South Dakota Governor Awards $500K for Center to Help Technology Businesses
A $500,000 state grant approved Thursday by South Dakota Governor Bill Janklow will help create a center in Sioux Falls for fledgling technology businesses.

The center — termed the technology business accelerator project — is being developed by Forward Sioux Falls, a joint-venture economic development partnership between the Sioux Falls Area Chamber of Commerce and the Sioux Falls Development Foundation. The center will offer leased space and provide business development services such as accounting, legal assistance and business planning.

To date, Forward Sioux Falls has raised approximately $2.5 million for the project. The funding includes the new state grant, a federal grant of $800,000 and $1.2 million of Forward Sioux Falls IV funds. The state grant comes from the South Dakota Future Fund.

The goal of the accelerator is to diversify the regional economy by helping entrepreneurs establish the next generation of technology-related businesses. The project’s task force is in the final stages of completing architectural, construction and organizational planning. In October, the task force will present the final project recommendations and budget to the Forward Sioux Falls Joint Venture Management Committee and seek approval to begin the construction process.

Developing the accelerator is the first step in establishing the Southeast Technical Institute and USDSU area of Sioux Falls as a core area for education, research and technology business development. More information is available at: http://www.state.sd.us/news/index.cfm

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To Cluster or Not to Cluster? Three Views on Cluster-based ED
Cluster-based economic development policy has gained wide acclaim in recent years as interest has grown in utilizing “cluster theory” in economic development. Some have found this idea to be appealing while others have been a bit less receptive of its ideas. Three recently released papers address cluster-based economic development from different angles. The first article explores options for utilizing cluster-based economic development in less advantaged regions. The second examines into evaluation techniques of cluster policy, while the third addresses concerns about “cluster theory” in general. Each is summarized below.

Creating Smart Systems: A Guide to Cluster Strategies in Less Favoured Regions
In Creating Smart Systems: A Guide to Cluster Strategies in Less Favoured Regions, released in April 2002 and written by Stuart Rosenfeld, strategies are presented to apply cluster-based economic development policies in lesser advantaged regions. One of the basic questions that is often asked in regional economic development is, “Why do some regions have the ability to develop and support innovative and competitive cluster and others do not?” Rosenfeld identifies and details five barriers that less favored regions face when attempting to develop cluster economies — weak infrastructure; lack of access to capital, technology, and innovation; regional insularity and isolation; low education levels; and a low skilled workforce. Rosenfeld presents six regional actions that regions can invoke in order to better apply cluster based economic development polices:

Warning that there is no single recipe to follow that will meet the needs of all clusters and regions, Rosenfeld simply presents a menu of actions that can be applied as required. The appropriate action depends on various factors such as geography, stage of development, resource constraints, special societal needs, cluster priorities, market imperfections, and local preferences.

Creating Smart Systems: A Guide to Cluster Strategies in Less Favoured Regions is available at: http://europa.eu.int/comm/regional_policy/innovation/pdf/guide_rosenfeld_final.pdf

The Challenge of Evaluating Cluster Behavior in Economic Development Policy
While Rosenfeld proposes actions for the use of cluster-based economic development in less favored regions, some question the evaluation methods of these policies. In The Challenge of Evaluating Cluster Behavior in Economic Development Policy released May 2002, Philip Raines addresses the need to redefine evaluation techniques for cluster-based economic development policies. Raines identifies the uniqueness of cluster-based policy and explains the differences with traditional spatial development.

While measures such as employment, output and jobs are important, they do not capture how processes are affected through policy, Raines asserts. Linkages between policy-induced changes in firm behavior and regional impacts go unevaluated.

Raines emphasizes limitations exist in applying traditional evaluation techniques to cluster-based policy. In spatial development evaluation, the link between output and result tends to be assumed; for cluster policy, however, this link is critical to the analysis. The main objective of cluster policy is to maximize the benefits and value that cluster agents can gain from networking. Crucial to this, and to the evaluation of policy, is how networking influences business performance. Because of the idea that cluster-based activity is a collective action, it presents new sets of problems for spatial development evaluation.

Raines asserts that more emphasis needs to be placed on understanding the links between individual business behavior, collective action and wider economic impacts in evaluation. Raines identifies five challenges that exist in evaluating cluster-based policy and proposes options that can be explored for addressing these issues. They are:

The Challenge of Evaluating Cluster Behavior in Economic Development Policy is available at: http://www.regional-studies-assoc.ac.uk/events/Raines.pdf

Deconstructing Clusters: Chaotic Concept or Policy Panacea?
Questions concerning not only evaluation techniques but also the actual constructs of cluster-based economic development exist. Ron Martin and Peter Sunley provide a unique critique of cluster theory in Deconstructing Clusters: Chaotic Concept or Policy Panacea? which is forthcoming in the Journal of Economic Geography.

While cluster theory has been popularized recently — largely because of wide readings of Harvard professor Michael Porter — Martin and Sunley stress the idea of specialized industrial localization is nothing new, dating back to 1890. The authors argue that instead of being a theory or model to be rigorously tested, the cluster concept has been accepted in economic development practice mainly on faith.

The two main constructs of Porter’s work on clusters involve linkages and geographical proximity — Martin and Sunley take issue with each of these. Regarding linkages, they assert that Porter’s concept provides no mechanism or definition for the strength of linkages necessary for the cluster concept. With respect to geographical proximity, the authors again take exception, saying the concept is never defined with precision. The Porter concept, they argue, accepts that clusters can be found at any level of spatial aggregation. With this definition, clusters can occur in rural or urban areas, large and small economies and even encompassing networks of countries. This sort of ambiguous geographical definition allows an unlimited scope in the characterization and application of the concept, Martin and Sunley contend.

They write, “The existence of clusters, appears then, in part at least, to be in the eye of the beholder or should we say, creator.” The authors then argue that this ambiguity of the cluster concept has lent to its convenience, there appear to be no rules or guidelines involved in its use and applicability.

The authors conclude that a concept so flexible as that given for clusters cannot provide a complete model on how spatial concentration is related to regional economic growth. Economic geographers and regional analysts have long understood that a simple association between high-growth industries and geographical concentration does not establish causality between the concentration and economic success. The practical case for clustering remains in its formative years and repeatedly errs in moving from particular relationships to general causality and applicability.

Deconstructing Clusters: Chaotic Concept or Policy Panacea can be downloaded from:
http://www.ges.bham.ac.uk/NewEconomyIntranet/Seminar2/Papers/Deconstructing_Clusters Jun.pdf

To learn more about Clusters...
Cluster-based ED will be analyzed further next week at SSTI's 6th Annual Conference, Building Tech-based Economic Development: From Policy to Practice. Dr. Jerry Paytas, Associate Director of the Center for Economic Development at Carnegie Mellon University, will conduct a breakout session next Wednesday at 10:30.

Dr. Paul Sommers, Senior Research Fellow with the Northwest Policy Center at the University of Washington, will lead a session later that same day that can help frame what approach a community should take in developing its tech-based economic development strategy. The session is entitled Why Do High Tech Firms Locate Where They Do?

More information on the conference is available at: http://www.ssti.org/conference02.htm [expired]

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Northwest Technology Investor Network Established
A regional partnership of economic development organizations, led by the Department of Energy's Pacific Northwest National Laboratory (PNNL), announced the launch of the Northwest Technology Investor Network last week. The network is an online forum that links investors and entrepreneurs in the high-tech sector.

"Technology-based businesses and manufacturers from throughout the Northwest can post their business plans on the Web site, connecting them to a nationwide network of accredited investors. Investors have one-stop access to quality business plans in the high-tech sector," said Gary Spanner, manager of PNNL's Economic Development Office.

The network is hosted by LocalFund, a nationally recognized company that hosts investor networks throughout the U.S.

In addition to the efforts of PNNL, partners in making the network available to entrepreneurs and investors include the Tri-Cities Enterprise Center, the Tri-City Industrial Development Council, the CH2M HILL Technology Education Center, the Applied Process Engineering Laboratory, Washington State University Tri-Cities Business Links and the Spokane Intercollegiate Research and Technology Institute.

The network is free to accredited investors who register and is offered at a 25 percent discounted rate to high-tech and manufacturing entrepreneurs for a cost of $18.75 per month. Further discounted rates also are available for semi-annual and annual postings.

More information on the network is available from Mr. Spanner at gary.spanner@pnl.gov or by visiting http://www.techinvestnw.com.

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Stronger TBED Efforts Would Benefit Orange County, Larta Asserts
True technology growth for Orange County hinges on a broader, more supportive infrastructure, argues the latest research report by the Los Angeles Regional Technology Alliance (Larta).

Raising the Curtain: The Technology Economy of Orange County examines the state of the region's health and stability, the obstacles that curtail its growth, and the strengths that will help move it forward as a leading economic and technology destination.

Backed by technology industries in electronics, computer hardware, bioscience, telecommunications and computer software, Orange County's diverse economy positions it "to be more stable and resilient than many other well known technology regions, such as Silicon Valley," the report states.

Industry clustering in Irvine, the mid-county area near Fullerton, and the South County area near Lake Forest and Aliso Viejo, according to the report, has allowed for greater networking opportunities and more efficient sharing of resources, "leading in turn to greater degrees of innovation and specialization." Orange County clustering efforts also have promoted the development of new technologies and research through partnerships involving the business community and local universities, the report observes.

Challenges exist, however. To maintain an ecosystem that supports its technology companies and the necessary work force, the report suggests Orange County must address issues of infrastructure — transportation and housing mainly — and a strained employment pool. Also, "the relative immaturity of venture capital and the potentially greater role of academia" need addressed, Larta asserts. Collaboration among businesses, government, and colleges and universities is required for the preservation of the county's technology-based economy, the report concludes.

Raising the Curtain: The Technology Economy of Orange County is available for purchase through http://www.larta.org/. An executive summary of the report is separately available for download at the website.

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116 Resources for Building Tech-based Economies
From angel capital to university technology commercialization, there are myriad facets to technology-based economic development (TBED). The key to success lies in a solid understanding of your respective element of the field — from grasping the policy issues to developing effective programs and practices to implementing sound evaluation techniques.

While the SSTI Weekly Digest and SSTI's annual conferences are designed specifically to help you in your quest for economic growth through science and technology, we recognize there are additional tools you need for your job. So, we've compiled a catalog of 116 of the best titles currently available to assist the TBED community.

Descriptions in SSTI's 20-page publication catalog are grouped in 15 categories organized by specific TBED goal. For instance, there are five titles for growing a bio-based economy, 13 covering the local aspects of TBED, 12 for engaging higher education in your TBED quest, and eight for encouraging entrepreneurship. Books selected for inclusion are geared to varied audiences from practitioners and policy makers to academic researchers.

Proving yet again we take our nonprofit status seriously, nearly every book is listed below suggested retail price. To go a step further, prices for many titles continuing from last year's catalog — even our best sellers — are lower than last year. SSTI sponsors and affiliate organizations also get a 10 percent discount.

All 116 titles will be available for review and purchase at SSTI's annual conference next week. Take delivery during the event to avoid shipping costs! In addition, our bookstore inventory space is tiny, so limited supplies of nearly 30 titles (discontinued from last year to make room for the newest work in the field) have been marked down drastically for the conference.

A PDF version of the SSTI's Resources for Building Tech-based Economies can be downloaded at: http://www.ssti.org/Publications/Onlinepubs/catalog.pdf

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No Digest Next Week; SSTI Offices Closed to Attend Annual Conference
The SSTI Weekly Digest and Funding Supplement will not be published next week as the office will be closed during SSTI's 6th Annual Conference, Building Tech-based Economies: From Policies to Practice on October 1-3.

The next issue of the SSTI Weekly Digest will be released on October 11.

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